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28 February 2018
Direct payments
Table of Contents A higher area actually receiving direct payments after the 2013 CAP reform .......................................................................................................................................................... 4
The agricultural area and the area getting direct payments in 2016 ........................................................................................................................................................................... 5
The direct payments expenditure per hectare by Member State in 2016 ................................................................................................................................................................... 6
The distribution of direct payments ........................................................................................................................................................................................................................... 7
Direct payments and land rents levels ...................................................................................................................................................................................................................... 13
The eligibility for direct payments ........................................................................................................................................................................................................................... 14
A high share of small beneficiaries .......................................................................................................................................................................................................................... 15
The models of basic payment after the 2013 reform ................................................................................................................................................................................................ 16
The internal convergence of the Basic Payment Scheme ........................................................................................................................................................................................ 17
A modest product from reduction and capping of basic payment............................................................................................................................................................................ 18
The redistributive payment in 2015 and 2016.......................................................................................................................................................................................................... 19
The young farmer payment in 2015 and 2016 ......................................................................................................................................................................................................... 20
The voluntary coupled support ................................................................................................................................................................................................................................ 22
The small farmer scheme in 2015 and 2016 ............................................................................................................................................................................................................ 23
This document does not necessarily represent the official views of the European Commission
Contact: DG Agriculture and Rural Development, Unit Farm Economics
Tel: +32-2-29 91111 / E-mail: [email protected]
© European Union, 2018 - Reproduction authorised provided the source is acknowledged
2
Figures
Figure 1: Trend in direct payment areas – EU-28 ...................................................................................................................................................................................................... 4
Figure 2: DP expenditure per ha of PEA by MS - 2016 ............................................................................................................................................................................................ 6
Figure 3: DP/farm and average UAA – 2014 & estimated 2019 DP ......................................................................................................................................................................... 7
Figure 4: Distribution of DP between farms in the EU in calendar year 2015 .......................................................................................................................................................... 7
Figure 5: Distribution of direct payments between farms in the EU in 2015 ............................................................................................................................................................ 8
Figure 6: Distribution of land between farms in the EU in 2015 ............................................................................................................................................................................... 8
Figure 7: Share of DP received by the 20% biggest beneficiaries by Member States, 2015 ..................................................................................................................................... 9
Figure 8: Share of land held by the 20% biggest farms (in physical size) by Member State, 2015........................................................................................................................... 9
Figure 9: Income and DP/ha by physical size (hectares of UAA) ........................................................................................................................................................................... 10
Figure 10: Income and DP per worker by physical farm size (hectares of UAA) ................................................................................................................................................... 10
Figure 11: Income and DP/ha by type of farming .................................................................................................................................................................................................... 11
Figure 12: Income and DP by type of farming ........................................................................................................................................................................................................ 11
Figure 13: Farm income and operating subsidies by intensity class, 2013-2015 ..................................................................................................................................................... 12
Figure 14: DP/ha and land rents by Member State .................................................................................................................................................................................................. 13
Figure 15: Threshold of DP level below which the active farmer provision is not applied ..................................................................................................................................... 14
Figure 16: Share of beneficiaries and DP by tranche of DP – EU 2015 .................................................................................................................................................................. 15
Figure 17: CAP - Convergence ................................................................................................................................................................................................................................ 16
Figure 18: Comparison of the distribution of SPS and BPS/ha ............................................................................................................................................................................... 17
Figure 19: Share of the product of reduction and capping in Basic Payment by Member State, 2015 and 2016 .................................................................................................... 18
Figure 20: Redistributive payment CY 2015 and CY 2016 – unit rate .................................................................................................................................................................... 19
Figure 21: Redistributive payment CY 2015 and CY 2016 - % applied.................................................................................................................................................................. 19
Figure 22: Share of young farmer payment beneficiaries in all basic payment applicants ...................................................................................................................................... 20
Figure 23: Actual young farmer payment versus estimated needs, 2015 and 2016 ................................................................................................................................................. 20
Figure 24: Average young farmer payment per ha, 2015 and 2016 ......................................................................................................................................................................... 21
Figure 25: Average determined BPS/SAPS area of young farmers and YFP area limit .......................................................................................................................................... 21
Figure 26: Voluntary coupled support in 2016: share of total VCS expenditure per sector .................................................................................................................................... 22
Figure 27: Share of Small Farmers Scheme applicants ........................................................................................................................................................................................... 23
Figure 28: Share of area covered by Small Farmers Scheme .................................................................................................................................................................................. 23
3
Tables
Table 1: Area figures by Member States.................................................................................................................................................................................................................... 5
Table 2: VCS - Amount by sector and member state in 2016 in million Euros* ..................................................................................................................................................... 22
4
A higher area actually receiving direct payments after the 2013 CAP reform
The Potentially Eligible Area (PEA) of
Direct Payments (DP) has slightly
decreased between 2014 and 2016 (-2.6%),
mainly due to the exclusion of ineligible
features in one Member State (correction
following audit).
The PEA covers about 90% of the Utilised
Agricultural Area in the EU.
The determined area has increased by
3.3% in 2016 (compared to 2014) as a
result of one of the 2013 reform objectives
to cover as much as possible all
agricultural area with payment
entitlements.
In 2016 the determined area was only 3%
below the PEA compared to 8.5% below in
2014.
It is still 14% below the Utilised
Agricultural Area (UAA), but it was 16%
below in 2014.
In 2016 the determined area slightly
decreased with 1.1% compared to 2015.
NB: These statistics correspond to the area declared by
farmers applying for the single payment scheme (2013
and 2014), basic payment scheme (2015 and 2016),
single area payment scheme (all years) and small farmer
scheme (2015 and 2016). They do not cover potential
area declared by farmers who applied only for certain
coupled payments (like cotton payments; voluntary
coupled support…), which is marginal.
Figure 1: Trend in direct payment areas – EU-28
UAA: Utilised Agricultural Area.
PEA: Potentially Eligible Area. It corresponds to the total area declared by beneficiaries and potentially eligible for
payment.
Determined area corresponds to the total area declared by beneficiaries and for which all eligibility conditions are
met. It takes into consideration the result of administrative and on-the-spot checks and for the Basic Payment
Scheme the number of payment entitlements.
Source: UAA – ESTAT and DG AGRI. PEA and Determined area – CATS.
5
The agricultural area and the area getting direct payments in 2016
The differences between the determined area
and the PEA are explained by the limitations in
the number of payment entitlements compared
to the eligible area for BPS Member States and
by the result of controls for all Member States.
Member States with the highest differences
between PEA and determined area in 2016 are
AT, ES, PT, IT, HR and the UK.
UAA is usually higher than PEA and determined
area. However it is sometimes lower because of
differences in the definition of eligible area for
direct payments and UAA (e.g. common land is
not always included in UAA).
The differences between the determined area and
the UAA can be explained by several factors:
farmers below the minimum requirements for
being granted direct payments, farmers not
fulfilling the eligibility conditions for being
allocated payment entitlements in BPS Member
States (some fruit and vegetables or wine
producers in certain Member States), and
farmers not applying for direct payments.
Member States with the highest differences between
UAA and determined area in 2016 are HR, RO, MT,
EL, BG, PT and IT.
NB: These statistics correspond to the area declared by farmers
applying for the single payment scheme (2013 and 2014), basic
payment scheme (2015 and 2016), single area payment scheme (all
years) and small farmer scheme (2015 and 2016). They do not cover
potential area declared by farmers who applied only for certain
coupled payments (like cotton payments; voluntary coupled
support…), which is marginal.
Source: UAA – ESTAT and DG AGRI. PEA and Determined
area – CATS.
Table 1: Area figures by Member States
UAA: Utilised Agricultural Area.
PEA: Potentially Eligible Area; the total area declared by beneficiaries and potentially eligible for payment.
Determined area; the total area declared by beneficiaries and for which all eligibility conditions are met. It takes into
consideration the result of administrative and on-the-spot checks and for the Basic Payment Scheme the number of
payment entitlements.
in hectares
Utilised
Agricultural
Area
Potentially
Eligible Area
(BPS/SAPS +
SFS)
Determined
Area (BPS/SAPS
+ SFS)
Difference
between
Determined
and PEA
% Difference
/PEA
Difference
between
Determined
and UAA
% Difference
/UAA
BE BPS 1,352,950 1,371,833 1,324,776 -47,057 -3% -28,174 -2%
DK BPS 2,625,100 2,641,779 2,578,384 -63,395 -2% -46,716 -2%
DE BPS 16,658,900 16,883,150 16,765,980 -117,170 -1% 107,080 1%
IE BPS 4,446,840 4,530,347 4,387,911 -142,435 -3% -58,929 -1%
EL BPS 5,091,930 3,704,960 3,694,632 -10,328 0% -1,397,298 -27%
ES BPS 23,816,330 20,557,816 19,090,207 -1,467,610 -7% -4,726,123 -20%
FR BPS 29,088,880 26,465,861 25,706,804 -759,057 -3% -3,382,077 -12%
HR BPS 1,546,020 1,090,260 1,039,253 -51,007 -5% -506,767 -33%
IT BPS 12,843,320 10,324,712 9,723,345 -601,367 -6% -3,119,975 -24%
LU BPS 130,600 122,377 121,294 -1,083 -1% -9,306 -7%
MT BPS 11,580 8,003 7,979 -24 0% -3,601 -31%
NL BPS 1,796,260 1,756,408 1,715,430 -40,978 -2% -80,830 -4%
AT BPS 2,688,830 2,571,981 2,266,189 -305,793 -12% -422,641 -16%
PT BPS 3,630,430 2,916,806 2,742,106 -174,700 -6% -888,324 -24%
SI BPS 477,670 452,193 446,325 -5,868 -1% -31,345 -7%
FI BPS 2,274,500 2,256,444 2,254,627 -1,817 0% -19,873 -1%
SE BPS 3,020,920 2,898,642 2,869,938 -28,704 -1% -150,982 -5%
UK BPS 17,360,000 14,930,024 14,291,730 -638,293 -4% -3,068,270 -18%
BPS member States 128,861,060 115,483,596 111,026,911 -4,456,685 -4% -17,834,149 -14%
BG SAPS 5,021,410 3,746,894 3,710,529 -36,365 -1% -1,310,881 -26%
CZ SAPS 3,488,790 3,541,284 3,539,607 -1,677 0% 50,817 1%
EE SAPS 1,003,510 953,576 948,992 -4,583 0% -54,518 -5%
CY SAPS 112,310 138,683 136,366 -2,317 -2% 24,056 21%
LV SAPS 1,930,600 1,695,273 1,687,896 -7,377 0% -242,704 -13%
LT SAPS 2,954,070 2,849,827 2,823,791 -26,036 -1% -130,279 -4%
HU SAPS 5,348,970 4,942,768 4,902,047 -40,721 -1% -446,923 -8%
PL SAPS 14,405,600 14,207,400 14,135,082 -72,318 -1% -270,518 -2%
RO SAPS 13,520,850 9,245,118 9,166,812 -78,307 -1% -4,354,038 -32%
SK SAPS 1,918,880 1,872,808 1,858,512 -14,296 -1% -60,368 -3%
SAPS Member States 49,704,990 43,193,631 42,909,634 -283,997 -1% -6,795,356 -14%
EU-28 178,566,050 158,677,227 153,936,545 -4,740,682 -3% -24,629,505 -14%
2016
6
The direct payments expenditure per hectare by Member State in 2016
In 2016, the average direct payments granted per hectare of
area declared by farmers amounts to 259 EUR/ha in the EU,
including the crop specific payment for cotton and the
possible national "top-ups" (Complementary National Direct
Payments for Croatia and Transitional National Aids).
This average DP/ha goes from 118 EUR/ha in EE to 622
EUR/ha in MT, reflecting to a greater or lesser extent the
differences in agricultural and economic situations in the
different Member States.
It should be underlined that those amounts are after possible
transfers of a share of the DP envelope to or from Rural
Development if decided by the Member State with the
flexibility between pillars1 (for example LV transferred
significant amounts to their Rural Development envelope).
Conclusions in terms of external convergence should be
drawn with care.
The part of each direct payments scheme reflects the financial
allocation (fixed at EU level or decided by Member State)2
and actual payments.
The basic payment (Basic Payment Scheme or Single Area
Payment Scheme) represents on average 52% of the direct
payments.
NB: The PEA used here does not cover potential area declared by farmers
who applied only for certain cotton payments and/or voluntary coupled
support without applying for basic payment. This area is marginal. 1 For more information on flexibility between pillars and other
financial aspects, see the document "Direct Payments: Financial
mechanisms in the new system" at
https://ec.europa.eu/agriculture/sites/agriculture/files/direct-
support/direct-payments/docs/direct-paymenst-financial-
mechanisms_en.pdf 2 For more information on the decisions taken by Member
States on direct payments, see the document "Direct payments 2015-
2020 Decisions taken by Member States".
http://ec.europa.eu/agriculture/sites/agriculture/files/direct-
support/direct-payments/docs/simplementation-decisions-ms-
2016_en.pdf
Figure 2: DP expenditure per ha of PEA by MS - 2016
PEA: Potentially Eligible Area - the total area declared by beneficiaries and potentially eligible for payment.
CNDP: Complementary National Direct Payments.
TNA: Transitional National Aids.
The Small Farmer Scheme (SFS) is financed by a share of the envelope of each other scheme. Those amounts do not take into
account the amounts transferred to Rural Development further to the flexibility between pillars (but they do include the amounts
transferred from Rural development to Direct Payments). The data do not cover the POSEI programmes for outermost regions
(POSEI), the measures in favour of the smaller Aegean islands nor the reimbursement of financial discipline (some 400 million
EUR at EU level).
Source: AGREX EU for DP expenditure, ISAMM for CNDP/TNA and CATS for PEA.
7
The distribution of direct payments
Direct payments are granted per hectare of eligible area,
hence the strong correlation between the amount of direct
payments and the agricultural area of the farm (see figure
3).
Consequently there is a strong link between the distribution
of direct payments and the distribution of area between
farmers.
Figure 4 shows that, in 2015, 20% of farmers still receive
about 80% of direct payments (similar ratio as in 20143)..
This is often perceived as unfair but it reflects mainly the
existing farm structure (see below).
The high number of very small beneficiaries plays an
important role in this distribution. Without farms below
1250 EUR of direct payments per year (i.e. about 100 EUR
per month), the ratio would become 80/30 (see figure 4).
NB: the graph on distribution of direct payments enclosed is based on
CATS data for financial year 2016 covering mainly claim year 2015.
3 https://ec.europa.eu/agriculture/sites/agriculture/files/cap-
funding/beneficiaries/direct-aid/pdf/annex2-2015_en.pdf
Figure 3: DP/farm and average UAA – 2014 & estimated 2019 DP
Source: FADN - DG AGRI. Based on 2012 data, with estimated 2019 DP (but no change of farms
structures and price environment)
Figure 4: Distribution of DP between farms in the EU in calendar year 2015
Source: CATS – DG AGRI.
0
20
40
60
80
100
120
140
160
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
(1) < = 5 Ha (2) 5< -10 Ha (3) 10< -20Ha
(4) 20< -30Ha
(5) 30< -50Ha
(6) > 50 Ha
UAA - ha DP - EUR
EU DP/farm Farm size (UAA)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Share of DP
Share of beneficiaries
All beneficiaries
Distribution without farms receiving less than 1250 EUR
8
As explained above, there is a strong link between
the distribution of DP and the distribution of land
among farmers.
The enclosed graphs show that globally in the EU,
the distribution of direct payments (in blue) and of
land (in green) is almost the same:
o 20% of the biggest beneficiaries (big in
terms of amount received) receive about
80% of direct payments;
o 20% of the biggest farms (big in terms of
farm size) hold about 80% of the area.
It means that if direct payments were granted as
a European flat rate, they would be as
concentrated as in the current situation.
It is important to notice that farms are ranked
differently for each curve: for the direct payments,
they are ranked according to increasing amount of
direct payments received. For the area, they are
ranked according to increasing farm size. It means
that the 20% biggest beneficiaries are not
necessarily the 20% biggest farms in physical size.
For the smallest beneficiaries/farms, the land curve
is slightly above the direct payments curve,
meaning that land is slightly less concentrated than
direct payments.
For the biggest beneficiaries/farms, that is the
contrary: land is a bit more concentrated than
direct payments.
Figure 5: Distribution of direct payments between farms in the EU in 2015
Figure 6: Distribution of land between farms in the EU in 2015
Source: CATS – DG AGRI.
NB: For the direct payments' curve, beneficiaries are ranked according to increasing amount of direct payments. For the area's curve, they are ranked according to
increasing farm size (measured in potentially eligible area). It means that the 20% biggest beneficiaries are not necessarily the 20% biggest farms.
9
It should be noted that the
distribution of direct payments varies
a lot among Member States.
Direct payments are more
concentrated than the EU average in
SK, CZ, PT, EE, HU, BG and RO
(ratio above 84/20).
They are less concentrated in LU,
NL, FR, FI, IE, BE and AT (ratio
below 58/20).
The concentration of the area varies
as well according to Member States.
Area is more concentrated than direct
payments in BG, DE, ES, LT and
UK. It means that in those Member
States, a national flat rate direct
payment would lead to more
concentration than in the current
situation.
While the 80/20 ratio can raise
questions, the real question is which
distribution of direct payments
allows better achieving the CAP
objectives.
This question is wide and complex
and should be addressed in the
relevant parts of the analysis.
However the following illustrations
can give a hint on what is currently
done for that purpose with direct
payments and on certain possible
shortcomings.
Figure 7: Share of DP received by the 20% biggest beneficiaries by Member States, 2015
Figure 8: Share of land held by the 20% biggest farms (in physical size) by Member State, 2015
94% 89% 87% 86% 85% 84% 84% 82% 80% 80% 78% 77% 77% 77% 75% 74% 73% 72%
69% 68% 64% 64%
58% 56% 56% 55% 54% 54%
48%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
SK CZ
PT EE HU
BG
RO
EU-2
8 IT LV ES HR CY LT DK PL
SE MT
DE EL SI UK
AT
BE IE FI FR NL
LU
94% 89%
86% 86% 84%
90%
82% 82%
76% 80% 81%
75% 77% 80%
73%
66% 68%
53%
71% 68%
56%
69%
53% 53% 48%
54% 53% 50%
46%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%SK C
Z
PT EE HU
BG
RO
EU-2
8 IT LV ES HR CY LT DK PL
SE MT
DE EL SI UK
AT
BE IE FI FR NL
LU
Source: CATS – DG AGRI.
10
For market-oriented farms (based on FADN data),
direct payments per hectare are on average lower
with increasing farm size (Utilised Agricultural
Area) while the average income per worker (Farm Net
Value Added per Annual Work Unit) is higher up to a
certain farm size (see Figure 9).
The unit support is thus higher for small farms which
have on average a lower income per worker.
However, the extent of the modulation of the relative
support is not as wide as the extent of the income gap.
Figure 10 actually shows that the share of DP in
income is higher with farm size.
It could be explored whether this discrepancy should
be addressed but with particular attention to the
possible other consequences.
NB: The Farm Accountancy Data Network (FADN) is based on a
sample of real farms representing farms above a certain economic
size, which does not represent the whole population of direct
payments' beneficiaries.
FNVA/AWU: Farm Net Value Added per Annual Work Unit, = amount
available to remunerate all factors of production (land, labour and capital,
both external and own factors).
Source: FADN - DG AGRI. Based on 2012 data, with estimated 2019 DP
(but no change of farms structures and price environment).
Figure 9: Income and DP/ha by physical size (hectares of UAA)
Figure 10: Income and DP per worker by physical farm size (hectares of UAA)
050100150200250300350400450
0
10000
20000
30000
40000
50000
60000
DP/ha - EUR/ha
Income - EUR/AWU
Income per worker (FNVA/AWU) Decoupled DP/ha
Coupled DP/ha EU average DP/ha
0%
5%
10%
15%
20%
25%
30%
35%
40%
0
10000
20000
30000
40000
50000
60000
Income - EUR/AWU
Income other than DP Decoupled DP (/AWU)Coupled DP (/AWU) EU average income per workerShare of DP (decoupled+ coupled) in income
Estimated DP 2019
Estimated DP 2019
11
Direct payments per hectare are on average slightly
higher for farm types with low average income per
worker as compared to the EU average (see Figure 11).
The exceptions are for "Specialists sheep and goats" and
"Specialists orchards – fruits".
They are not systematically lower for types of farming
with high income (for example "Specialist other field
crops").
But Figure 11 should be looked at together with Figure
12 on the share of direct payments in income per worker.
It shows that direct payments compensate to a certain
extent the income gap as compared to EU average
agricultural income for the low income types of farming:
more for "Specialists milk" and "Specialists cattle"
than for "Specialists sheep and goats" and "Mixed
livestock".
Looking at these two graphs in parallel shows for
example that the high direct payments per hectare for
"Specialists olives" (Figure 11) do not allow
compensating totally the income gap with the average
for those farms (Figure 12).
On the other hand, the direct payments per hectare for
"Mixed livestock" farms do not allow compensating the
income gap with the EU average. Those farms remain
the type of farming with the lowest income per worker.
Based on those provisional data, the magnitude of direct
payments for "Specialists COP" and "Specialists other
field crops" seems high compared to their income
situation (above the EU average).
However, this should be analysed together with the
additional challenge of volatility of farm income which
is not represented in these graphs. Moreover it should be
recalled that direct payments are not distributed
according to the type of farming.
Figure 11: Income and DP/ha by type of farming
Figure 12: Income and DP by type of farming
050100150200250300350400450
0
5000
10000
15000
20000
25000
30000
35000
40000EUR/AWU Income (FNVA/AWU) DP/ha EU average DP/ha
05000
10000150002000025000300003500040000
EUR/AWU Income (other than DP) (FNVA/AWU) DP/AWU EU average FNVA/AWU
Estimated DP 2019
Estimated DP 2019
FNVA/AWU: Farm Net Value Added per Annual Work Unit, indicator of income per worker, = amount available to remunerate all factors of production (land, labour and capital, both external and own factors).
Source: FADN - DG AGRI. Based on 2012 data, with estimated 2019 DP (but no change of farms structures and price environment)
12
The enclosed graph shows the average income per worker, the share of direct payments and other support in income and direct payments per hectare by class of
intensification for 2013-2015.
Extensive classes have on average a lower income than intensive classes, but up to a certain limit and with certain nuances.
The most intensive classes have the highest income per worker. The most extensive class has similarly a higher income than the next four classes.
The more intensive the farms, the higher the direct payment per hectare.
However, the share of direct payments in income is higher for the extensive classes than in very intensives classes.
Figure 13: Farm income and operating subsidies by intensity class, 2013-2015
FNVA/AWU: Farm Net Value Added per Annual Work Unit, indicator of income per worker, = amount available to remunerate all factors of production (land, labour and capital, both
external and own factors).The level of intensity is based on the intermediate consumption cost per 1 hectare of Utilized Agricultural Area (UAA)
*Other RD: RD measures other than LFA, including national top-ups, but excluding investments supports. Source: FADN - DG AGRI. 2013-2015
13
Direct payments and land rents levels
In a majority of Member States, the land rent per ha is lower than the total EU DP per ha, except in DK and NL;
The land rent is close to the level of DP/ha in BG, DE, IE, AT, FI and SE.
Figure 14: DP/ha and land rents by Member State
Sources: 2016 AGREX for DP, 2016 CATS for PEA and 2015 FADN for land rents.
0
100
200
300
400
500
600
700
800
900
BE BG CZ DK DE EE IE EL ES FR HR IT CY LV LT LU HU MT NL AT PL PT RO SI SK FI SE UK EU
EUR/ha
DP/ha and land rents by Member State
Decoupled DP (EUR/ha) Coupled DP (VCS + cotton) (EUR/ha) Land rent (EUR/ha)
14
The eligibility for direct payments
The basic eligibility conditions for direct payments are4:
o To comply with the so-called "minimum requirements",
o To be active farmers,
o And to have agricultural land at their disposal that is used
for agricultural activity.
Direct payments can only be granted above certain thresholds
defined by Member States called minimum requirements.
Generally, direct payments are not granted where the amount
of direct payments to be granted is less than an amount
between EUR 100 and EUR 500 and/or where the claimed
eligible area is less than an area ranging from 0.3 ha to 5 ha.
Those minimum requirements are meant to avoid the
excessive administrative burden caused by managing
payments of small amounts.
In addition, the applicant must fulfil the condition of being a
farmer (natural or legal person, or a group of natural or legal
persons, whose holding is situated within the territory of the
European Union and who exercises an agricultural activity).
Since the 2013 reform, applicants must also fulfil the
conditions of the "active farmer clause". The provision aims
at preventing individuals and companies from receiving
support from the CAP when their business is not agricultural
or is only marginally so.
4 For more information on eligibility:
https://ec.europa.eu/agriculture/sites/agriculture/files/direct-
support/direct-payments/docs/direct-payments-eligibility-
conditions_en.pdf
Figure 15: Threshold of DP level below which the active farmer provision is not
applied
Source: ISAMM
The key element is a negative list of businesses (airports, waterworks, real estate
services…). Entities operating an activity on the "negative list" are not considered
"active farmers" unless they can prove that their farming activity is not marginal,
using one of the defined 3 possibilities to rebut the negative presumption.
If Member States want to, they can apply a stricter definition of active farmer.
However, those who received less than a certain amount of direct payments in the
previous year are considered de facto active farmer. This amount is set by Member
States but may not be higher than EUR 5000. As can be seen from the graph above,
the majority of Member States sets the threshold at this maximum.
Other eligibility conditions are added for specific schemes (e.g. greening, young
farmers…).
15
A high share of small beneficiaries
On average, at EU level, half of the direct payments beneficiaries receive less than EUR 1250 per year (around 100 EUR/month).
It corresponds to 4.5% of the total direct payments envelope.
This situation raises several questions:
o From an income support point of view: should there be a stronger redistribution towards smaller beneficiaries? What could the other impacts of such
redistribution be?
o Is it consistent with the objective of enhancing EU agriculture competitiveness?
o From a policy efficiency point of view, can small amounts of direct payments prove efficient in achieving DP and CAP objectives and make a real difference
both in terms of income support and in terms of development of small farm businesses?
Where is the right balance between administrative simplification (cutting the number of "very small" applications) and the continuing support of the CAP to "genuine"
farmers with small structures?
Figure 16: Share of beneficiaries and DP by tranche of DP – EU 2015
Source: CATS – DG AGRI. NB: the graph is based on CATS data for financial year 2016 covering mainly claim year 2015.
50.4%
4.5%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
< 0.5 K € < 1.25 K € < 2 K € < 5 K € < 10 K € < 20 K € < 50 K € < 100 K € < 150 K € < 200 K € < 250 K € < 300 K € < 500 K € ≥ 500 K €
Cumulative (ascending) share of number of beneficiaries - 2015 Cumulative (ascending) share of expenditure - 2015
16
The models of basic payment after the 2013 reform
The basic payment is the basic layer of income support, possibly
topped-up by other direct payments targeting specific issues or
specific types of beneficiaries. The following map illustrates the
model of basic payment and internal convergence chosen by
each Member State.
18 Member States apply the Basic Payment Scheme (BPS)5.
Under BPS, farmers are allocated payment entitlements on the
basis of historical references (for the access and the unit value of
their entitlements). In order to get a payment, farmers need to
activate those entitlements with the declaration of an equivalent
number of eligible hectares on an annual basis.
DE, MT, FR-Corsica and UK-England apply the model of
internal convergence "flat rate from 20156":
o For DE and UK-England, it is applied at regional level
(i.e. different flat-rate payments in different regions);
o In addition DE will move to a national flat rate in 2019.
NL, AT, FI, UK-Scotland and UK-Wales have chosen the
internal convergence model "flat rate in 2019".
o For FI and UK-Scotland, it is applied at regional level.
BE-Flanders, BE-Wallonia, DK, IE, EL, ES, continental FR,
HR, IT, LU, PT, SI, SE and UK-Northern Ireland apply a
partial convergence by 2019.
5 For more information on BPS, see the document "Direct Payments -
BASIC PAYMENT SCHEME" at
https://ec.europa.eu/agriculture/sites/agriculture/files/direct-support/direct-
payments/docs/basic-payment-scheme_en.pdf 6 For more information on internal convergence, see the document "Direct
Payments: the Basic Payment Scheme from 2015. Convergence of the value of
payment entitlements ('Internal Convergence')" at
https://ec.europa.eu/agriculture/sites/agriculture/files/direct-support/direct-
payments/docs/internal-convergence_en.pdf
o EL and ES will apply it at regional level.
o SE will close 5/6 of the gap to 100% of 2019 average by 2019 and will move to a
flat rate from 2020.
The other 10 Member States keep applying the Single Area Payment Scheme (SAPS) which
is a national flat rate area payment.
Figure 17: CAP - Convergence
Source: ISAMM notifications from Member States.
17
The internal convergence of the Basic Payment Scheme
In the 18 Member States applying the Basic Payment Scheme
(BPS), the 2013 reform has allowed moving away from
historical references with a certain convergence of direct
payments per hectare within Member States (see options taken
by MS in previous section).
The graph shows that the area covered by BPS/ha close to the
average in 2015 and 2016 is significantly higher than it was in
the year preceding the reform.
A higher convergence will be attained in 2019. However, some
significant differences in average BPS amounts per hectare will
remain in 2019 in those Member States that apply the partial
convergence.
NB: It should be noted that the vast majority of Member States/regions concerned
have chosen to apply the greening payment as a percentage of the BPS payment.
It means that in almost all of them, the greening payment will follow the same
convergence path as the BPS. Only DE, LU, MT, FI, UK-England and UK-
Scotland apply the uniform greening payment per hectare.
Figure 18: Comparison of the distribution of SPS and BPS/ha
SPS: Single Payment Scheme (equivalent system as BPS before the 2013 reform)
BPS: Basic Payment Scheme
NB: The data is excluding the Small Farmers Scheme (SFS)
Source: CATS – DG AGRI.
18
A modest product from reduction and capping of basic payment
The reduction of payments applies only to the basic payment (and not to the total direct payments), and the obligation in terms of reduction is set at a
very low level (5% reduction from EUR 150 000 of BPS/SAPS, with the possibility to deduct salaries from the amount of basic payment before applying
the reduction). Steeper reductions and capping can be implemented but are not compulsory7. Member States applying the redistributive payment with more
than 5% of their national ceiling allocated to the scheme may decide not to apply the mechanism at all (BE-Wallonia, DE, FR, HR, LT and RO).
For 2015, the product of the reduction (including capping) has amounted to EUR 98 Million, which represents only 0.44% of the basic payment
expenditures. For 2016, the product of the reduction and capping has amounted to EUR 79 Million, representing only 0.36% of the basic payment
expenditure. Even in Member States implementing the capping, this product has remained generally low with the exception of Hungary, where the product
of reduction and capping (set at 176 000 EUR) represents 6.6% of the envelope in 2015 and 5.6% in 2016 (lower than initially estimated by HU).
The difference between the percentage of the reduction and capping between 2015 and 2016 can be explained by an increase in the basic payment (SAPS)
envelope in BG, and by a lower value of high-value payment entitlements due to internal convergence in BPS MS like IT, PT, SI and the UK.
Figure 19: Share of the product of reduction and capping in Basic Payment by Member State, 2015 and 2016
Source: AGREX DG AGRI.
7 For more information on the reduction of payments and capping, see the document "Direct Payments: Financial mechanisms in the new system" at
https://ec.europa.eu/agriculture/sites/agriculture/files/direct-support/direct-payments/docs/direct-paymenst-financial-mechanisms_en.pdf
0%
1%
2%
3%
4%
5%
6%
7%
AT BE BG CY CZ DK EE EL ES FI HU IE IT LU LV MT NL PL PT SE SI SK UK
2015 2016
19
The redistributive payment in 2015 and 2016
The redistributive payment (RP) is applied by 9 Member States
in 2015 and 2016: BE-Wallonia, BG, DE, FR, HR, LT, PL, RO
and UK-Wales. The financial allocation to the scheme goes from
0.5% to 15% of the Member States national ceiling for direct
payments.
It aims at achieving a more effective income support for smaller
farmers by granting an extra payment per hectare for the first
hectares below a certain threshold8.
All farmers eligible for BPS/SAPS receive the redistributive
payment. However, they only receive this payment up to a
certain number of hectares per holding. As a result, only a part
of the BPS/SAPS area receives the redistributive payment. For
most Member States the redistributive payment is paid for
approximately 50% of the basic payment area.
As regards the redistributive payment unit rate, MS had the
option to fix an amount up to 65% of the average
national/regional direct payment per hectare.
However, this maximum amount was not used. The shares go
from 0% for the first tranche in PL to 35% in BE-Wallonia.
In 2016, FR and UK Wales increased the percentage of the total
direct payment envelope dedicated to the redistributive payment
compared to 2015, resulting in a higher unit rate.
8 For more information on the redistributive payment:
https://ec.europa.eu/agriculture/sites/agriculture/files/ds-dp-redistributive-
payment_en.pdf
Figure 20: Redistributive payment CY 2015 and CY 2016 – unit rate
Figure 21: Redistributive payment CY 2015 and CY 2016 - % applied
Source: 2015 and 2016 CATS and ISAMM
Source: 2015 and 2016 CATS and ISAMM
20
The young farmer payment in 2015 and 2016
The young farmer payment (YFP) targets farmers of no
more than 40 years of age who are setting up for the first
time an agricultural holding as head of the holding, or
who have already set up such a holding during the 5
years preceding the first application to the scheme.
The scheme is compulsory for Member States9.
4.2% of basic payment applicants benefited from the
young farmer payment in the EU in 2015 (see Figure 22).
This share increased to 4.8% of applicants in 2016.
This share is the highest in CZ (14.4%), followed by NL
(11.4%).
It is still rather high (above 6%) in IE, FR, LT, FI, UK-
NI, DE, AT, PL, SI in 2015 and 2016.
It is low (around 2% or less) in CY, SK, UK-E, ES, PT,
RO.
The total payments for young farmers amount
approximately to EUR 337 million (0.84% of the DP
envelope), well below the initial estimates (1.23% of the
DP envelope) in 2015. In 2016, the total YFP amount to
EUR 365 million (0.90% of the DP envelope).
Only a few Member States spent actually more than
estimated in 2016 (CZ, LT, LU, FI, HR, HU, PL and SI).
NB: in figure 23 the estimated needs are calculated before financial
discipline (e.g. capping, linear reduction) while the expenditure in figure
23 is "net", meaning after financial discipline.
9 For more information on the young farmer payment:
https://ec.europa.eu/agriculture/sites/agriculture/files/direct-support/direct-payments/docs/young-farmer-payment_en.pdf
Figure 22: Share of young farmer payment beneficiaries in all basic payment applicants
Source: CATS.
Figure 23: Actual young farmer payment versus estimated needs, 2015 and 2016
Source: expenditure - AGREX and estimated needs - ISAMM.
21
The average young farmer payment per ha varies
between 20 EUR/ha (in UK-W, BG, EE, MT and RO)
and more than 80 EUR/ha (BE, DK, CY, NL, EL and
IT).
Between 2015 and 2016, the average young farmer
payment per hectare increased mainly in IT and AT. The
average young farmer payment per hectare decreased in
UK-NI, PL and SI.
The young farmer payment can be granted up to a certain
limit in hectares.
The enclosed graph shows that the area limit is relatively
low in comparison with the average farm size of young
farmers in FR, SK, UK-W, BG and EE.
There are also restrictive effects in UK-E and UK-Sc
even if they went for the maximum of 90 ha.
Figure 24: Average young farmer payment per ha, 2015 and 2016
Figure 25: Average determined BPS/SAPS area of young farmers and YFP area limit
Source: 2015 and 2016 CATS and ISAMM.
22
The voluntary coupled support
Member States can use up to a maximum percentage of
their annual national ceiling for direct payments to
finance voluntary coupled support (VCS)10
.
VCS is a production-limiting scheme that can only be
granted to a list of sectors and productions in sectors or
regions where specific types of farming or specific
agricultural sectors particularly important for economic,
social or environmental reasons undergo certain
difficulties.
In 2015 and 2016, 27 Member States applied VCS for
about EUR 4 billion (about 10% of the total direct
payments envelope).
The main sectors supported are Beef and veal, Milk and
milk products, Sheep and goat meat and protein crops
(84% of the amounts spend under VCS).
10
For more information on the voluntary coupled support:
http://ec.europa.eu/agriculture/direct-support/direct-payments_en
Figure 26: Voluntary coupled support in 2016: share of total VCS expenditure per sector
* 'Other' includes grain legumes, starch potato, nuts, seeds, hops, hemp, oilseeds, silkworms and flax.
Table 2: VCS - Amount by sector and member state in 2016 in million Euros*
* The table gives the amount of coupled payments in million Euros. Where the value is zero, it means that the
amounts spend per sector are below EUR 1 000 000. Source: ISAMM
23
The small farmer scheme in 2015 and 2016
The Small Farmers Scheme is an optional, simplified
scheme which replaces all other direct payments a farmer is
entitled to. It is applied in 15 MS.
It includes simplified administrative procedures for farmers:
participating farmers are exempted from greening obligations
and cross-compliance penalties11.
MS can opt for different calculation methods to determine
the annual payment farmers participating in the SFS are
entitled to. The level of payment is limited to a maximum
of EUR 1 250 (a lower maximum can be fixed by the MS).
In 2015, an estimated 2.9 million applicants (representing
around 50% of the total DP applicants) applied for the SFS.
Their holdings are rather small (estimated 2.6 ha on
average), which is also represented by the share of SFS area
in the total area determined (estimated at 9 %).
SFS applicants represent between 3% (SI) and 90% (MT)
of DP applicants. The area covered by the SFS goes from
0.5% in DE to about 70% of total DP area in MT.
Between 2015 and 2016 there is a significant drop in the
number of applicants for the SFS (to 2.3 million, 40% of
total DP applicants). The share of SFS area in the total
determined area decreased from 9% to 7% in 2016.
The main explanations for the decrease in number of SFS
applicants between 2015 and 2016 are that these applicants
are able to receive more direct payments outside the SFS
which is limited to a maximum amount of EUR 1 250 (a
lower maximum can be fixed by the MS) and the restriction
under the SFS that farmers have to maintain the same
number of hectares as in CY2015.
11
For more information on the small farmer scheme:
https://ec.europa.eu/agriculture/sites/agriculture/files/direct-
support/direct-payments/docs/small-farmers-scheme_en.pdf
Figure 27: Share of Small Farmers Scheme applicants
Figure 28: Share of area covered by Small Farmers Scheme
Source: CATS. * PL assumption that total N° of SFS in CY2015 is equal to farmers automatically included and remaining
under the scheme; area of SFS in 2015 estimated based on SFS area 2016 and average decrease in SFS area in other MS.
